Part 4 Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2016. Edison purchased the equipment from International Machines at a cost of $252,812. Manufacturers Southern elected the short-term lease option. Appropriate adjusting entries are made annually. Related Information: Lease term Quarterly lease payments Economic life of asset Interest rate charged by the lessor Respond to the question with the presumption that the guidance provided by the proposed Accounting Standards Update is being applied. Required: 1 years (4 quarterly periods) $23,500 at Jan. 1, 2016, and at Mar. 31, June 30, Sept. 30. 5 years 8% Prepare appropriate entries for Manufacturers Southern from the beginning of the lease through December 31, 2016

Part 4 Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2016. Edison purchased the equipment from International Machines at a cost of $252,812. Manufacturers Southern elected the short-term lease option. Appropriate adjusting entries are made annually. Related Information: Lease term Quarterly lease payments Economic life of asset Interest rate charged by the lessor Respond to the question with the presumption that the guidance provided by the proposed Accounting Standards Update is being applied. Required: 1 years (4 quarterly periods) $23,500 at Jan. 1, 2016, and at Mar. 31, June 30, Sept. 30. 5 years 8% Prepare appropriate entries for Manufacturers Southern from the beginning of the lease through December 31, 2016

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Company A leases a motor vehicle from Company B.• The lease became effective 1 January 2014 and the lease term is for 4 years.• The annual lease payments are 10 000 per annum, in arrears.• There is no option of renewal (of the lease agreement).• The implicit interest rate is 10%.• The fair value of the motor vehicle at 1 January 2014 is 31,700. Required:For each of the scenarios below, discuss whether or not the above lease agreementconstitutes a finance lease: Scenario 1: The useful life of the motor vehicle is 8 years. At the end of the lease period,ownership of the motor vehicle transfers from Company B to Company A.  Scenario 2: The useful life of the motor vehicle is 4 years. At the end of the lease period,ownership of the motor vehicle remains with Company B.  Scenario 3: If the lease payments per annum is $5,000 and the useful life of the vehicle is8 years.
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Question 3 Apparel Leasing Company signs a lease agreement on January 1, 2021, to lease equipment to Oman Company. The term of the non-cancelable lease is 8 years, and payments are required at the end of each year. The following information related to this agreement: 1. The equipment has a cost and fair value of $9,500,000 to Apparel, an estimated useful life of 10 years, and no residual value at the end of that time. Annual lease rental is $1,441,606. 2. Apparel Company desires to earn an 8% return on its investment. Instructions: A) Prepare an amortization schedule for the lessor for 2021 and 2022. B) Prepare the journal entries on the lessor's books on January 1, 2021 and December 31, 2021.
Recording Operating Lease-Lessor Gomez Inc. leases a vehicle from CareMax Inc. on January 1 for a three-year period. Gomez agrees to make $9,600 annual payments beginning on January 1. Prepare the journal entries during the year for CareMax Inc. assuming that the fair value of the vehicle is $44,800 and it has a useful life of 6 years with no salvage value (depreciated using the straight-line method). CarMax Inc. appropriately classifies the lease as an operating lease. Note: Round your answers to the nearest whole dollar. Account Name Date Jan, 1 Dec. 31 Dec. 31 Check To record receipt of lease payment To record lease revenue + # To record depreciation → = → # Dr. 0 0 0 0 0 0 Cr. 0 0 0 0 0 0
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